For decades, the global tech race has been run by 2 nations: the United States of America and China. Of course, there are economies like South Korea and Japan that make massive contributions to innovation, but the American and Chinese industries stand alone in their production capabilities and funding. Until now.
Saudi Arabia’s crown prince, Muhammad Bin Salman, has been committed to revolutionizing his country ever since he took office, and the core of his strategy is making KSA the next technological epicenter of the modern world. To this end, he’s committed over 100 billion USD and established ambitious plans like Vision 2030. This article will explore the myriad of projects MBS has sanctioned to propel KSA into the future, the challenges they’re bound to face, and whether they can actually compete with the innovation heavy hitters to their East and West.
Setting the Stage for a Saudi Takeover
This massive investment from MBS isn’t coming out of the blue; it’s been in the making for a long time. For nearly a decade, KSA’s digital economy has been growing rapidly, a result of massive government investment and the adoption of emerging technologies. At this time last year, at the end of 2023, Saudi Arabia had the largest and fastest-growing information and communications technology in the MENA region, a feat in and of itself when you’re competing with the United Arab Emirates.
Despite the success, the Kingdom has no intentions of slowing down. Their technology sector has risen to 4.1% of their GDP, nearly 40 billion dollars. This puts KSA at the cusp of breaking into the highest echelon of innovative economies. Even if you look at them on an international level, KSA is outperforming most of their political competitors; they were the second-ranked nation in the UN's ICT development index at the end of 2023. These facts are probably what gave the Saudi government the confidence to announce ambitious projects like Vision 2030, something we’ll discuss in this article, and the recently announced $100 billion investment.
Transcendence: The $100 billion bet
Any country that wants to modernize its economy needs to invest in their country's technological infrastructure, but KSA’s commitment to the AI sector dwarfs even the most ambitious modernization plans. They just announced Project Transcendence, the $100 billion injection into the country’s artificial intelligence ecosystem. The Kingdom has decided to put on their gloves and get in the ring—first attempting to rival their neighboring tech rivals U.A.E. and then moving into the global arena.
Transcendence is a diversified investment into a variety of channels that are critical to all technological development, but some of their attention specifically goes into the advancement of locally developed AI systems. This includes several data center expansions, partnerships with technology firms, investments into their data analytics sector, and much more. The section below goes deeper into the specific goals of Project Transcendence.
The Branches of Transcendence
Artificial Intelligence
AI is the core of Project Transcendence. More specifically, the country wants to invest in their data analytics sector, emerging technologies that use the Internet of Things, and the vast world of cloud computing. This deep dive into technological investment is meant to align the country’s trajectory to hit the ambitious targets set in Vision 2030. Spending in the sector surpassed the projected $720 million in 2024 and is on track to nearly $2 billion by 2027.
This annual compound growth rate of over 40% is unprecedented on the global scale, but exactly what the Saudi Data and AI Authority (SDAIA) is looking for. Their express goal is to make Saudi Arabia a global leader in AI by 2030, a goal that looks very possible now that they’re the largest beneficiary of AI-powered technology in the Middle East. PxC reports indicate that these investments are going to bring 10x returns for KSA in the next 5 years, with earnings of over $135 billion.
5G Connectivity
KSA has quickly become one of the most connected nations on the planet. The 5G internet is undoubtedly regarded as the best publicly available network human beings have developed, and the Kingdom has adopted it wholeheartedly. In the capital city of Riyadh, 94% of residents have access to 5G coverage, while the national coverage goes up to 77% (significantly higher than the global average). However, it’s important to understand that MBS isn’t investing in the country's 5G network for recreation. KSA is positioning itself as the world’s leading IT service provider, and companies need fast internet to compete in the global economy.
Cloud Computing
The ‘Cloud’ has become a world of its own, with an increasing percentage of data stored in virtual servers as opposed to physical ones. The rise of remote work and international collaboration has only been possible because of the advancements we’ve made in cloud computing and security. Staying in line with global trends, the Kingdom introduced its Cloud First Policy which requires all government agencies to use cloud-based solutions as their primary course of action.
While the growth in this sector isn’t as stratospheric as AI, cloud computing still boasts a CAGR of 25%. With the prioritization policies in place, spending in cloud computing is on track to exceed $4.7 billion by 2027. However, that’s not it. The Kingdoms’ most impressive show of commitment to cloud computing has been the establishment of the Cloud Computing Special Economic Zone in 2023. This specialized area for data centers and cloud computing servers has attracted major international players like Google. With Microsoft and Amazon Web Services also establishing footholds in KSA, the stage is set for a competitive technological environment that will help build local talent in the country.
E-commerce and Online Payment
One of the core objectives outlined in Vision 2030 is making Saudi Arabia the world’s first cashless economy by 2030. Right now, electronic payments already makeup 57% of all retail transactions, and the young, tech-savvy population will only cause this number to grow. Considering how vital the e-commerce sector has become for KSA, it’s completely understandable why they want to heavily invest in improving their online payment infrastructure.
Statista estimated the Saudi e-commerce market to be worth around $5.15 billion at the end of 2023 (6% of the Kingdom's $92 billion retail market). However, this number is definitely going to rise because of the market trend: e-commerce users are expected to increase to 34.5 million by the end of next year, and user penetration for e-commerce platforms will reach 75% by the end of 2027. This rise in e-commerce doesn’t just make life easier for the youth; it’s vital for attracting large, international players in digital financial services.
Vision 2030
We’ve been mentioning Vision 2030 repeatedly throughout our discussion, so let’s take a minute to get a deeper understanding of what this project actually entails. While the recent investment announcement outlines a concrete structure for growth, Vision 2030 is more of a conceptual direction the Kingdom has taken.
Vision 2030 is the cornerstone of KSA’s plan to reduce their economies dependence on fossil fuels and move towards becoming a knowledge-based economy. The comprehensive roadmap for technological revolution demands broad, structural strokes of innovation. Of course, the Kingdom is taking the steps necessary to bring such a monumental dream to fruition.
In today’s global economy, it’s impossible to scale operations to a meaningful level locally. You need to integrate global tech giants into your ecosystem and open your markets up for foreign investors, like the $13.4 billion made by LEAP in 2024. Additionally, the $40 billion promised by the Public Investment Fund specifically for AI is bound to attract foreign businesses.
Large-scale projects like the sustainably powered NEOM city and the long-awaited LINE have been designed to stimulate the technology industry, attracting foreign experts and specialists that enrich local talent with their knowledge. However, despite all this investment and the impressive trajectory KSA is on, what they’re trying to accomplish is massive. It requires a complete overhaul of several sectors of the Saudi economy and society.
Hurdles in the Saudi Technology Roadmap
Nurturing Local Talent
The Kingdom needs a steady supply of technology specialists to power their vision, but it’s extremely difficult to cultivate the kind of talent they need in half a decade. They need to ramp up investment in education and training, specifically in STEM fields. At the moment we’re seeing projects like the Saudi Digital Academy that partners with global universities, but the Kingdom needs to establish training programs earlier in the student lifecycle.
On the other hand, KSA provides tons of incentives to entrepreneurs with their incubators, accelerators, and funding programs. Creating a supportive environment for technological experimentation is the best way to supercharge innovation in your economy.
The biggest challenge KSA has faced in the past has been its refusal to allow women equal participation in the economy. Not only does this alienate the Kingdom from half their potential workforce, it also harms their international reputation. However, they seem to have softened on the issue, and the crown prince has made concerted efforts to promote women in STEM fields. Female participation in the technology sector increased from 11% in 2017 to a record high of 35% in 2024.
Data Privacy and AI Regulation:
Creating opportunities in the technology space automatically creates vulnerabilities for your citizens. Just like you need to boost security and stability in your country to attract businesses, you need to create secure virtual spaces so businesses feel comfortable. It goes without saying that the Kingdom is taking steps to ensure cybersecurity, but it’s a long and hard road. Their regulatory framework for data privacy and AI is still underdeveloped.
The fields of AI and technology evolve so rapidly that it’s extremely challenging to create regulations that cover the industry over any reasonable time period. International organizations have their own standards for data protection, and if they judge your regulations aren’t up to the mark, massive foreign players simply won’t operate within your borders.
Cross-Border Data Flows:
As an extension of our previous point, the biggest regulatory challenge for KSA is managing the flow of information across borders. While it’s not difficult to create silos in certain zones and networks, the purpose is not to create a bubble. If your regulations are too rigid, it can become a roadblock for multinational corporations. KSA needs to create regulatory workarounds that are secure but also don’t disproportionately increase operational costs or make network management too difficult on the global scale.
Cybersecurity:
Data privacy is a section of cybersecurity, but it’s far from the complete picture. In 2023, KSA was ranked as the second-largest global market for malicious email attacks. Considering how much this harms KSA’s image on the global stage and, in turn, harms Vision 2030, the Kingdom is investing $1.6 billion in cybersecurity by 2027. Cyber threats rapidly evolve with technology, which makes it necessary that KSA constantly re-evaluate its regulations and standards. The National Cybersecurity Authority (NCA) is responsible for keeping all public and private sectors secure and ensuring that medium- and small-sized businesses are compliant with industry regulations.
Market Entry and Public Sector Procurement:
Security isn’t the only thing foreign businesses need when they’re entering a new market. They need to navigate a completely new regulatory environment and procurement process. Businesses will face licensing complications, struggle with local content requirements, and form partnerships with relevant local organizations. It’s also natural for tenders and contracts to favor local companies, which can discourage foreign businesses. KSA must make sure large, multinational corporations find favorable policies in the Saudi digital economy.
Vision 2030 is one of the most ambitious development projects any country has undertaken in the field of technology, and KSA seems to be taking the steps needed to make it into reality. The $100 billion investment into AI and data science, the myriad of social development projects designed to uplift Saudi image, and the constantly improving regulatory environment should position KSA as challengers to the thrones of technology in the East and the West.
